Titan Company, a leading Indian consumer goods company, recently announced its financial results for the third quarter of fiscal year 2024. Here’s a breakdown of the company’s performance and various brokerage recommendations based on the earnings report:
Financial Highlights
Net profit for Q3 FY24 stood at ₹1,040 crore, marking a growth of 9.4% compared to the same period last year.
Revenue from operations witnessed a robust growth of 20% year-on-year, reaching ₹13,052 crore.
Earnings before interest, tax, depreciation, and amortization (EBITDA) rose by 9.5% to ₹1,457 crore, albeit with a contraction in EBITDA margin by 100 basis points to 11.2%.
Segment-wise Performance
Jewellery
The jewellery segment recorded a total % income growth of 23% over Q3 FY23, amounting to ₹11,709 crore.
Despite the overall growth, the EBIT margin for jewellery slightly contracted to 12.2%.
Titan’s brands, Tanishq and Mia, witnessed significant expansion in their domestic network during the quarter.
Watches & Wearables
Total income from this segment increased by 21% year-on-year to ₹982 crore.
The analogue watches revenue grew by 18%, while the Wearables portfolio showed substantial growth.
Fastrack and Titan Smart were notable performers in the Wearables category.
EyeCare
The EyeCare segment experienced a decline of 4% in total income, amounting to ₹167 crore.
Despite the decline, the segment maintained a reasonable EBIT margin of 8.4%.
Titan Eye+ expanded its international presence with store openings in Dubai and Sharjah.
Emerging Businesses
Emerging Businesses, including Indian Dress Wear (Taneira) and Fragrances, Fashion Accessories (F&FA), witnessed a growth of 26% year-on-year, reaching ₹112 crore in total income.
However, these businesses collectively recorded a loss of ₹20 crore for the quarter.
Subsidiaries’ Performance
Caratlane, a key subsidiary, saw its total income grow by 32% YoY to ₹893 crore, with an EBIT margin of 9.2%.
Titan Engineering & Automation recorded a remarkable growth of 61% YoY in total income.
Brokerage Recommendations
1) Prabhudas Lilladher
Trimmed FY24, FY25, and FY26 earnings-per-share estimates due to margin pressure across segments.
Expect an improvement in watch margins but maintain that eyewear margins would remain low.
2) ICICI Securities
Points out the elevated competitive intensity in the sub-1,00,000 jewellery segment.
Highlights the need to monitor the adoption of lab-grown diamonds and trends in studded jewellery.
3) Nuvama Institutional Equities
Highlights a miss in consensus earnings due to weaker jewellery, watches, and wearables margins.
Retains a ‘Buy’ rating, raising the target price to ₹4,106 per share.
4) Antique Stock Broking
Remains optimistic about Titan over the medium to long term.
Cut FY24 estimates by 8% but maintained the ‘Buy’ recommendation, raising the target price to ₹4,100 per share.
5) Motilal Oswal Financial Services
Expects a gradual recovery in gross margin supported by the studded ratio.
Reiterates ‘Buy’ rating with a target price of ₹4,200 per share.
6) Centrum Broking
Upbeat on Titan’s operating performance and international market prospects.
Increases FY24E and FY25E earnings and raises the target price to ₹4,255 per share.
Summary
Titan Company demonstrates resilience and growth potential despite some margin pressure in specific segments. Brokerages generally maintain a positive outlook on the stock, emphasizing its strong brand positioning, growth prospects, and strategic initiatives. However, investors are advised to remain vigilant regarding margin trends and competitive dynamics in the jewellery market.
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